With rising health-care costs a concern worldwide, Senior Writer Goh Sui Noi looks at Taiwan's journey to universal coverage
The Straits Times, 16 Mar 2012
AFTER decades of high growth, Taiwan's national income per capita rose 55 times by 1990 to US$7,997 from just US$145 in 1951. But its health-care system was deplorable, with 45 per cent of the population not covered by insurance and finding it difficult to afford health care.
Partly because of pressure from opposition parties and the people - and because the island's buoyant economy allowed it - the government began in 1988 to devise a universal health-care system.
In 1995, the National Health Insurance (NHI) system was established, providing health care to Taiwanese and giving them a free choice of doctors and minimal waiting time. It is a government-run fund which everyone must join and pay into.
Although it is running into a deficit, the Taiwanese are happy with their health-care system, with approval ratings of over 70 per cent. 'Compared with the US where those without health insurance live in fear of falling ill, and with Britain where delivery is slow, Taiwan's health care is really 'care free',' said Ms Tina Chung, 41, a project administration assistant.
Her 78-year-old mother, Madam Chung Chiu Hsiu-jung, waited a month for her first knee replacement operation in 2010 - not because of a long waiting list, but because she wanted an auspicious date for the operation, which the surgeon accommodated.
Even Taiwanese living overseas return for medical check-ups. One Taiwanese told online newspaper GlobalPost that her relatives in Chicago fly back to Taiwan to see the doctor when they fall ill as 'airline tickets are less expensive than getting treated in the US'.
Ms Chung finds the insurance premiums affordable. She pays NT$650 (S$28) a month for her own insurance and another NT$650 for her mother, who is registered as her dependant. She is covered for outpatient and inpatient care, laboratory tests, diagnostic imaging, prescription drugs, dental care (except orthodontics and prosthodontics), traditional Chinese medicine, day care if mentally ill, limited home health care and certain preventive medicine (including health check-ups and prenatal care), and even HIV/Aids and organ transplants.
Taiwan's national health insurance system covers 99 per cent of its population of 23 million, with some Taiwanese living overseas and some of the homeless not covered. Since last year, convicts are also covered by the system.
The premium charged is 4.91 per cent of salaries and wages, with income capped at NT$182,000 per month. Those employed pay 30 per cent of the premium, with the employer paying 60 per cent and the government 10 per cent. The government picks up the tab for the poor and subsidises army veterans, people living in remote areas and the self-employed, among others. It uses revenue from tobacco tax and lottery proceeds to finance health insurance premiums.
Unsurprisingly, given the generous coverage, costs have outpaced premiums and revenue in recent years. In 2010, there was a deficit of NT$60 billion. Last year, the government introduced a supplementary premium of 2 per cent on additional earnings such as interest, rent and stock dividends. This move is expected to balance the budget within five years.
This supplementary premium was a compromise after the legislature rejected another proposal to base premiums on household income. Although a better mechanism, lawmakers feared it would cost them votes in elections this year.
The government is the sole purchaser and administrator of health care, so prices for treatment are standardised. However, health-care delivery is done through a mix of public and private hospitals and clinics. With prices standardised, these health-care providers compete on the basis of quality, to patients' advantage.
There is a co-payment system to reduce overuse. Patients co-pay NT$50 to NT$100 for outpatient consultations and 20 per cent of the cost of prescription drugs, with a cap of NT$200 per prescription. However, this co-payment is so low, old folk visit clinics for the slightest ailment.
The star of the system is a smart card carried by every patient. It contains basic medical data such as the patient's medication, tests done and their results, and the last time the patient saw another physician. The unified electronic system makes claims processing efficient, keeping administrative costs low at 2.3 per cent of the total premium compared with more than 10 per cent in the United States. Moreover, it allows the government to track the number of visits patients make to the clinics and to persuade them to see the doctor less frequently if they are seen to be making unnecessary visits.
When the system first started, health providers were reimbursed on a fee-for-service basis, which encouraged them to give more treatment to boost income. To reduce over-treatment, this was changed to a global budgeting system in which the government sets the yearly budget for a provider within which it has to operate.
This system's drawback is that a provider's earning ratio decreases once it hits its preset budget. It has led to providers cutting costs and reducing staffing, leading to a drop in the service quality, and persuading patients to buy medication or treatment outside the NHI list and giving preference to lucrative treatment such as cosmetic surgery before NHI services. Some hospitals have expanded their food and shopping facilities to boost revenue. The non-government health-care watchdog, Taiwan Health Care Reform Foundation, has criticised the global budgeting system for causing these issues.
For all its flaws, the World Bank in 2005 praised Taiwan's health-care system - together with that of Japan and other Asian tigers, including Singapore - as providing valuable lessons for developing countries. The Economist Intelligence Unit last year ranked Taiwan fourth for its potential in health-care tourism.
But the Taiwanese are calling for reforms. Last month, a member of the Control Yuan, which monitors the government, called for another round of reform to address wastage of medical resources and uneven spending by health providers. He gave as example excessive expenditure on kidney dialysis equipment and respirators.
To be sure, the Taiwanese system is a work in progress. Other changes will have to be made as demographics change, given Taiwan's fast-ageing population and its low fertility rate of 1.1.
It will also have to put its financing on a more sustainable basis so that premiums can cover costs.
For now, it is a system that works well enough for the Taiwanese.
The Straits Times, 16 Mar 2012
AFTER decades of high growth, Taiwan's national income per capita rose 55 times by 1990 to US$7,997 from just US$145 in 1951. But its health-care system was deplorable, with 45 per cent of the population not covered by insurance and finding it difficult to afford health care.
Partly because of pressure from opposition parties and the people - and because the island's buoyant economy allowed it - the government began in 1988 to devise a universal health-care system.
In 1995, the National Health Insurance (NHI) system was established, providing health care to Taiwanese and giving them a free choice of doctors and minimal waiting time. It is a government-run fund which everyone must join and pay into.
Although it is running into a deficit, the Taiwanese are happy with their health-care system, with approval ratings of over 70 per cent. 'Compared with the US where those without health insurance live in fear of falling ill, and with Britain where delivery is slow, Taiwan's health care is really 'care free',' said Ms Tina Chung, 41, a project administration assistant.
Her 78-year-old mother, Madam Chung Chiu Hsiu-jung, waited a month for her first knee replacement operation in 2010 - not because of a long waiting list, but because she wanted an auspicious date for the operation, which the surgeon accommodated.
Even Taiwanese living overseas return for medical check-ups. One Taiwanese told online newspaper GlobalPost that her relatives in Chicago fly back to Taiwan to see the doctor when they fall ill as 'airline tickets are less expensive than getting treated in the US'.
Ms Chung finds the insurance premiums affordable. She pays NT$650 (S$28) a month for her own insurance and another NT$650 for her mother, who is registered as her dependant. She is covered for outpatient and inpatient care, laboratory tests, diagnostic imaging, prescription drugs, dental care (except orthodontics and prosthodontics), traditional Chinese medicine, day care if mentally ill, limited home health care and certain preventive medicine (including health check-ups and prenatal care), and even HIV/Aids and organ transplants.
Taiwan's national health insurance system covers 99 per cent of its population of 23 million, with some Taiwanese living overseas and some of the homeless not covered. Since last year, convicts are also covered by the system.
The premium charged is 4.91 per cent of salaries and wages, with income capped at NT$182,000 per month. Those employed pay 30 per cent of the premium, with the employer paying 60 per cent and the government 10 per cent. The government picks up the tab for the poor and subsidises army veterans, people living in remote areas and the self-employed, among others. It uses revenue from tobacco tax and lottery proceeds to finance health insurance premiums.
Unsurprisingly, given the generous coverage, costs have outpaced premiums and revenue in recent years. In 2010, there was a deficit of NT$60 billion. Last year, the government introduced a supplementary premium of 2 per cent on additional earnings such as interest, rent and stock dividends. This move is expected to balance the budget within five years.
This supplementary premium was a compromise after the legislature rejected another proposal to base premiums on household income. Although a better mechanism, lawmakers feared it would cost them votes in elections this year.
The government is the sole purchaser and administrator of health care, so prices for treatment are standardised. However, health-care delivery is done through a mix of public and private hospitals and clinics. With prices standardised, these health-care providers compete on the basis of quality, to patients' advantage.
There is a co-payment system to reduce overuse. Patients co-pay NT$50 to NT$100 for outpatient consultations and 20 per cent of the cost of prescription drugs, with a cap of NT$200 per prescription. However, this co-payment is so low, old folk visit clinics for the slightest ailment.
The star of the system is a smart card carried by every patient. It contains basic medical data such as the patient's medication, tests done and their results, and the last time the patient saw another physician. The unified electronic system makes claims processing efficient, keeping administrative costs low at 2.3 per cent of the total premium compared with more than 10 per cent in the United States. Moreover, it allows the government to track the number of visits patients make to the clinics and to persuade them to see the doctor less frequently if they are seen to be making unnecessary visits.
When the system first started, health providers were reimbursed on a fee-for-service basis, which encouraged them to give more treatment to boost income. To reduce over-treatment, this was changed to a global budgeting system in which the government sets the yearly budget for a provider within which it has to operate.
This system's drawback is that a provider's earning ratio decreases once it hits its preset budget. It has led to providers cutting costs and reducing staffing, leading to a drop in the service quality, and persuading patients to buy medication or treatment outside the NHI list and giving preference to lucrative treatment such as cosmetic surgery before NHI services. Some hospitals have expanded their food and shopping facilities to boost revenue. The non-government health-care watchdog, Taiwan Health Care Reform Foundation, has criticised the global budgeting system for causing these issues.
For all its flaws, the World Bank in 2005 praised Taiwan's health-care system - together with that of Japan and other Asian tigers, including Singapore - as providing valuable lessons for developing countries. The Economist Intelligence Unit last year ranked Taiwan fourth for its potential in health-care tourism.
But the Taiwanese are calling for reforms. Last month, a member of the Control Yuan, which monitors the government, called for another round of reform to address wastage of medical resources and uneven spending by health providers. He gave as example excessive expenditure on kidney dialysis equipment and respirators.
To be sure, the Taiwanese system is a work in progress. Other changes will have to be made as demographics change, given Taiwan's fast-ageing population and its low fertility rate of 1.1.
It will also have to put its financing on a more sustainable basis so that premiums can cover costs.
For now, it is a system that works well enough for the Taiwanese.
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